If Spray Net exercises its 'step-in rights', what management fee must the franchisee pay?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
In the event Franchisor exercises these "step-in rights," Franchisee must (a) pay Franchisor a management fee amounting to eight percent (8%) of the Gross Sales of the Franchised Business during the time period that Franchisor's representatives are operating the Franchised Business (the "Management Fee"), and (b) reimburse Franchisor for all reasonable costs and overhead that Franchisor incurs in connection with its operation of the Franchised Business, including without limitation, costs of personnel supervising and staffing the Franchised Business and any travel, lodging and meal expenses.
If Franchisor undertakes to operate the Franchised Business under this Section, Franchisee must indemnify, defend and hold Franchisor (and its representatives and employees) harmless from and against any Claims that may arise out of Franchisor's operation of the Franchised Business.
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, if Spray Net exercises its "step-in rights" to operate a franchised business, the franchisee must pay Spray Net a management fee. This management fee is calculated as eight percent (8%) of the Gross Sales of the Franchised Business during the period that Spray Net's representatives are operating the business.
In addition to the management fee, the franchisee is also responsible for reimbursing Spray Net for all reasonable costs and overhead incurred while operating the business. These costs can include, but are not limited to, the expenses for personnel supervising and staffing the Franchised Business, as well as any travel, lodging, and meal expenses incurred by Spray Net's representatives.
Furthermore, the franchisee is obligated to indemnify, defend, and hold Spray Net (along with its representatives and employees) harmless from any claims that may arise as a result of Spray Net's operation of the Franchised Business during this period. This means the franchisee is responsible for protecting Spray Net from any legal or financial liabilities stemming from their management of the business.